Credit card reform is a long overdue victory for consumers

Standing next to President Obama in the White House Rose Garden on May 22, I was thrilled to see the credit card reform legislation I'd been working on for so long finally become law. But probably not as thrilled as some of the millions of American families with a credit card.

There are going to be real changes to how credit card companies do business, which are going to help families breathe a little easier in this tough economy.

No more boosting the rate you have to pay on existing balances. No more luring you into a contract with terms that turn out to be too good to be true. No more using marketing gimmicks to ensnare young students in credit card contracts they can't afford -- a provision I introduced. And no more changing your contract without your consent.

Throughout the reform process, those of us who have been championing an end to the deceptive and predatory practices that are creating family debt have been bombarded with overblown warnings from special interests. For a long time, their cry was that common sense consumer credit card protections would make it harder to get credit. That argument never made much sense in an environment where the average household gets more than 30 credit card solicitations every year, so it didn't stick.

Since this new law passed Congress, we've heard a new rumor: Some claim that benefits for cardholders in good standing will vanish. If fees are more reasonable, they say, credit card companies will no longer be able to offer perks such as comparatively low introductory interest rates, cash-back bonuses and airline miles.

Those threats are about as believable as the credit card contracts these companies constantly rewrite.

Credit cards are a vital part of our family finances, which means there's still healthy competition for your business, and perks will be needed to earn it. Credit card companies will continue to be highly profitable -- they still make money off interchange fees charged to businesses every time you use their card, so they're going to keep offering perks to make their card attractive. Your frequent flier miles are safe.

The credit card protections we passed into law are for everyone, regardless of whether you keep up with your payments or fall behind. When credit card companies -- many of which received federal rescue funding -- began to jack up their interest rates during this economic crisis, even some of the most responsible cardholders were hit. Under this legislation, everyone's interest rate is safe from wild and unexpected increases. That benefits us all.

Make no mistake about it, this credit card reform legislation was a big victory for consumers over special interests, something we weren't able to celebrate very much during the Bush administration.

So instead of giving credence to the last-gasp scare tactics of the credit card industry, let's focus on implementing the important reform that is coming.

Families should no longer feel like a trap door is going to open up beneath them every time they swipe their card, and now we've taken a major step to make sure that doesn't happen.
This is an idea that has been badly needed for years, and I'm proud that we've seized this golden opportunity to make it a reality.